Suppliers is an important category of stakeholders of any organization.
Every organization needs suppliers. They may be producers,
distributors, retailers, vendors, or contractors for certain products
needed by the organization including providers of service or information.
From the organization's point of view its suppliers represent business
to business (B2B) situation that normally differs from the business
to consumer (B2C) cases. Outsourcing has created a new interesting
category of suppliers, especially those who are globally distributed
and far away from the organization ("off shore outsourcing").

Importance of the suppliers for the quality integration (or quality
management) of an organization is emphasized in all recognized references
of the quality profession, especially in the ISO
9000 standards and performance
excellence models.

An organization and its suppliers are interdependent, and their
mutually beneficial relationship enhances the ability of both to
create value. In fact, therefore in a genuine supplier relationship
we may always also find a customer relationship, and we can talk
about partnership. A successful partnership between two independent
parties presupposes that both of them should benefit of the relationship
and cooperation. Both parties should also give something of his
/ her own resources in order to get the benefit. Both parties have,
however, differing value scales based on their own identity and
interests for the partnership. Positive net value (value receivables
minus loss) is essential to the both parties (see the figure).

Supplier management is not the most suitable expression to describe
clearly the cooperation of an organization and its suppliers. Instead
of that a win / win approach (according to the figure) is
more useful and may be seen as the foundation for a sustainable
and successful partnership. Thus, the new emphasis in the concept
supplier management should be how to promote through an organization's
management practices and decisions the mutually beneficial collaboration
with its supplier partners.

An organization's suppliers form a network, and it is useful to
consider that also together with the organization's customer network.
Still many references talk about supplier chains and value chains
but today this is a rather poor view to the organization's supplier
situation as a whole. Researchers of modern business management
have proved that today's networked forces of business environment
- including buyers, suppliers, substitutes, competitors, new entrants,
digitalization, globalization, and deregulation - are wreaking havoc
on the value chains. One can be sceptical that an organization can
even truly execute any plan for optimizing a value chain. In various
industries existing competitive advantage is being wiped out as
new competitors quickly produce new value creating structures that
use new technology especially for communication. Organization's
strategy can no longer be based on tinkering with today's value
chain but to find ways to alter it radically. The concept of value
network has actually much greater power to create benefits and
to avoid stumbling when confronting rapid changes in the market
place and technology basis for business. Value network is the context
within which a firm identifies and responds to stakeholdes' needs,
solves problems, procures input, reacts to competitors, and strives
for profit. Within a value network, each organization's competitive
strategy, and particularly its past choices of markets, determines
its perception of economic value of new business solutions, e.g.
based on new technology.

Quality assurance refers to measures with which a supplier
strives for getting its customer-organization convinced of the fact
that the requirements pertaining to products are met and that the
supplier has reasonable abilities for that. The practices are quite
analogous with which the organization creates and strengthens confidence
among its customers. There are many possible solutions for establishing
quality assurance but the essence
of a good quality assurance - and also as a whole a good supplier
relationship - is always an effective communication between an organization
and its each supplier.

There are continually business actions between the organization
and its suppliers that reciprocally influence each other. The added
value to the parties is created by these transactions, but there
are always also involved costs, so called transaction costs.
The transaction cost theory was created in 1937 by Ronald Coase.
He described the issue in his article "The Problem of Social
Cost": "In order to carry out a market transaction it
is necessary to discover who it is that one wishes to deal with,
to conduct negotiations leading up to a bargain, to draw up the
contract, to undertake the inspection needed to make sure that the
terms of the contract are being observed, and so on." Coase's
theory has a strong impact to structures of organizations and their
supplier networks. Transaction cost elements are multifariously
related to communication between the parties. Increasing communication
effectiveness is a great challenge to the development of principles
and practices for supplier relationship. In this use of Internet's
possibilities is a great challenge because the cost of individual
transactions may be decreased to minimum and consequently one may
increase the amount of transactions effectively. Internet may also
give quite new possibilities for supplier and quality assurance
communication, e.g. real time multimedia information, "e-certificate"
solutions, and collaborative social networking applications.

Suppliers related information and communication of an organization
is needed generally within the organization's business environment
as a whole including all stakeholders and also potential new partners,
with existing partners, internally within organization's own people,
and within organization's own experts for supplier quality. All
these areas require different kind and scope of information and
communication, such as:

Confidence is a critical key factor for a success in cooperating
between partnering organizations. It is also a competitive advantage
because it difficult to imitate a genuine confidence and to create
it in a short term. Importance of confidence is increasing because:
- Today organizational operation and cooperation are mainly based
on knowledge.
- Organizations aim at adding value by combining resources, competences
and skills through partnering.
- Global networking of different organizations is continuously increasing.
- Continuous and efficient exchange of information and knowledge
is a necessity between organizations' all stakeholders. Both number
and variety of stakeholders has increased, and communication between
them has increased, intensified, diversified, and speeded up tremendously
due to global telecom networks and services. Also company-dedicated
internal networks are tightly linked with the public networks. Large
part of the information considered is confidential at least to some
stakeholders.
- There is always also risk that hostile parties intend to infiltrate
to one's networks.

Transparency is the core element for building confidence among
cooperating organizations and individuals. Increased risks and uncertainties
within the operational environment set raised requirements for confidence.
An organization may create and strengthen its confidence abilities
through:
- Clearing and reinforcing its own identity
- Developing superior competences and skills
- Developing social networking and collaborating skills
- Practicing open and transparent communication
- Keeping promises and committing to them
- Being interested in, having respect for, and taking care of the
others